Sunday, March 4, 2018

Trump Warns He May Escalate Trade War

President Trump has fired back at EU threats to retaliate against his planned tariffs on imports of aluminum and steel, declaring he would simply target European automakers if that happened.

“If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a Tax on their Cars which freely pour into the US,” the President tweeted on Saturday. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”

Such a step by the President would do nothing but limit choices for American businesses and consumers. The more product that flows into the United States, the more product is available for American businesses and consumers, regardless of foreign country trade policies toward the United States.

In other words, tariffs will lower the standard of living for Americans. Trump does not appear to recognize this at all. He has a very shallow understanding of international trade and the law of comparative advantage.